For people, who are planning their future, annuities have become popular once again. It is not that they stopped being used altogether, but people thought of other investment options as more lucrative. However, these annuities are back in competition once again, given the fact that investing in gold and shares has its drawbacks, such as sudden crashes and the volatility of the markets. Along with 401K and other retirement plans that are sponsored by the employers, annuities have caught the imagination of people once again.


If you are in your mid thirties and have saved a sum of money that you would like to invest for the future, you must take a look at the various schemes offered by insurance companies that are around. Annuity is an investment tool that is most suitable for life after retirement, as annuity rates are not that high to make them attractive for a short term investment. The thing to remember is that there are both fixed annuity rates and variable annuity rates. Fixed rates remain, as the name implies, fixed for the duration of the annuity and cannot fall below a guaranteed rate of return. On the other hand, variable rates are of course higher than fixed rates, but they are subject to market forces and hence they can go below a base rate whenever there is high pressure from the markets.

Multiple Attractive Features of Annuities
Talking about the benefits or attractive features of annuities, it is worth mentioning the fact that deferral of tax on the growth of fund is certainly one of the most attractive features of these investment tools. This means that the money saved through annuities grows in a fast manner and the fund swells to the liking of the investors. Then there is the feature that allows one to invest a higher amount than is currently being allowed in retirement plans like 401k. Another benefit is the flexible payment options for the investors that suit the interests of those who need cash flow at various intervals in their lives. However, one benefit that outweighs all others is the lure of a guaranteed income stream after retirement. The mere thought of receiving a monthly pension, even if you were to live more than 100 years is one feature that makes annuities very attractive in the eyes of people.

If you Want Higher Rates, Start Early in Life
Rates of annuities provided by insurance companies are dependent upon the age of the investor. The younger the investor, the higher is the rate of annuity offered to him. What this means is that if you are desirous of high annuity rates, you must start early. Your fund will grow in size to your liking, for the growth is tax deferred.

One thing that all investors need to keep in mind is that withdrawals from the annuity fund are discouraged and penalized by the IRS. One should only withdraw if there is no other option left. This is because there is a penalty tax of 10% imposed by the IRS.
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